The move brings Microsoft into contention in a race led by Google, which has just added thousands of public domain books and documents to its free Google Print service.
Alistair Baker, EMEA managing director at Microsoft, said: "This deal will add to the level of content and value of the MSN portal."
Libraries participating in Google Print are the New York Public Library and those at the universities of Michigan, Harvard and Stanford. Work included features the writings of Henry James and congressional acts, as well as regimental histories dating back to the American Civil War.
However, Google's plans to publish excerpts from copyright-protected works have attracted lawsuits from the US publishing industry.
Microsoft is working as part of the Open Content Alliance, a consortium including Yahoo! and several US and Canadian universities and institutions. The OCA is restricting itself to publishing pre-1923 works on which the copyright has expired, meaning they are in the public domain.
The British Library and Microsoft first have to overcome the technical challenges of digitising books, maps and manuscripts. The software company has said it will invest £1.4m during 2006 in a pilot project covering 10,000 books.
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